Survival Strategies of Small and Medium Enterprises in Nigeria (A Study of Some Selected SMEs in Enugu Metropolis)
Chapter One
Purpose of the Study
The specific objectives of this study include the following:
- To identify the general problems or challenges militating against the effective operations of SMEs in Nigeria.
- To identify the survival strategies of SMEs in Nigeria.
- To provide an overview of the role of government in financing and developing SMEs in Nigeria.
- To determine to what extent the government policies support or hinder the growth of SMEs in Nigeria.
- To suggest strategies through which SMEs can compete favorably with the products of emerging economies and that of the developed world.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
This section of the research entails the review of some related literature which led to the breakdown of the problem into sub-topic as follows: Definition and Concept of Small and Medium Enterprises (SMEs) in Nigeria, Features of SMEs, roles/benefits of SMEs in Nigeria, problems/challenges of SMEs in Nigeria, concept of strategy and the survival strategy of SMEs in Nigeria, Central bank of Nigeria’s support and scheme for SMEs financing and summary of literature review.
Definition and Concept of Small and Medium Enterprises SMEs in Nigeria
Small Enterprises in Nigeria exist both in urban and rural settings. In the rural setting these enterprises tend to be agricultural and unmechanized in nature while those located in the urban area are inclined towards manufacturing. Furthermore, as we move from rural to urban settings, the size of enterprises increases progressively to the extent that they can be categorized as medium scale Kpakol (2007:3).
Defining SMEs is central to developing well targeted policies and programmes either for the sector or the overall development of the economy. Sequel to this, there are three major reasons for appropriate definition of Small and Medium Enterprises namely; for inclusion in legislation, for research purposes and for reasoning intelligently about our nation’s economic problems. Broom and Longencker (1979) as cited in Onuwchekwa (2003: 26).
Andrew (1995:33) there is no uniform definition of Small and Medium Enterprises acceptable in different parts of the world. Different countries, bodies, banking institutions and researchers have found it useful to define SMEs according to the problem of interest.
Olaleye et al (1997: 13) holds that the concept of SMEs is relative and dynamic. The definition changes over a period of time and depends to a large extent on a country’s level of development.
Andrew holds the view that defining characteristics run through number of employees, sales, turnover, initial capital outlay, management, industry type, use motive power, current capital investment, fixed assets etc. Some definitions use these characteristics singly while others used a combination of them. However, employees and assets are more frequently used than others. The level of these enterprises in different countries do not specifically interest us here. What is of interest to us is how SMEs have been defined in Nigeria and how far such definitions are useful for the present study.
In Nigeria, there have been series of review of the definition of Micro, Small and Medium Enterprises (MSME). Statistically, MSMEs were defined as those employing 10-99 workers, hence industrial enterprises employing less than 10 workers were classified as micro and those employing more than 100 workers were classified as large scale enterprise. Also fixed assets, which respond to temporal changes in the context of inflationary effects on assets valuation, have for a long time been employed in defining MSMEs in Nigeria Kpakol (2007:4).
Real and serious attempts at formulating a nationally acceptable definition of the MSMEs in Nigeria were first instituted by the second National Development Plan (1970 – 1975). Under this arrangement, the Small Industries Development Plan (SIDP) was formulated and implemented with a view to providing technical and financial support to the then existing and prospective small –scale industries.
CHAPTER THREE
RESEARCH METHODS
Introduction
This chapter involves research design, area of study, population of the study, sample size and sampling techniques, instruments used for data collection, method of data collection sources of data analysis, reliability and validity of the instrument and method of data analysis
Research Design
This describes the area of study, the procedures and method adopted by the researcher in the course of the study. It also contains sources of the data, population and sample size determination, instrument used for data collection, data analysis techniques. The study is descriptive in nature.
Area of Study
This study is narrowed to Small and Medium Enterprises in Enugu metropolis. Though not all the SMEs in Enugu were covered, a reasonable and sizeable number were covered by the use of random sampling.
Population of the Study
The population of the study cover the Small and Medium Enterprises in Enugu out of which 1270 are members of Small and Medium Scale Entrepreneurs Promotion and Training Association of Nigeria (SEPTA) Enugu Chapter and 280 belong to Enugu Chamber of Commerce, Industry Mines and Agriculture (ECCIMA) making the total population of 1550.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
This chapter involves data presentation, analysis of questionnaire.
Gathering data and analyzing these data into information determines the quality and accuracy of any research work. In order to accomplish the aims and objectives of this study, the collection and analysis of data were carefully organized to ensure reliable result.
Thus, the analysis of data does not only aid the researcher in obtaining relevant information but it also serves as an instrument for testing the hypothesis under study.
CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
This chapter vividly shows the summary of findings, conclusion, recommendation.
Summary of Findings
The growth and survival of SMEs in Nigeria is a function of how they sharpen their marketing mix (product, price, promotion and distribution (place) in satisfying their consumers.
In this course of the research study, the researcher came up with the following findings as regards the Survival Strategies of Small and Medium Enterprises in Nigeria. Among other findings are:
- Majority of the SMEs do not have infrastructural facilities at their disposal. The inadequate and ineffective infrastructures thus do not allow SMEs to compete favourably. Such facilities include electricity, water supply, communication, good road etc.
- While most SMEs are registered, they also pay tax from the profit generated from the business.
- While there are different marketing strategies which can be adopted, most of the SMEs adopt the integrated marketing strategy; the combination of product, price, promotion and distribution strategies.
- A good number of SMEs have had their products gain market access. While only few of the SMEs have highly exposed their staff to seminar/workshops on entrepreneurship.
- Government policies were ranked as one of the highest problems facing SMEs especially in the area of implementation. Aside policy implementation, denial of access to credit is a great problem facing the SMEs.
- Government has been able to support SMEs through the establishment of certain initiative schemes such as Bank of Industries (BOI) and new economic reform strategy National Economic Empowerment Development Strategy (NEEDS), Small and Medium Industries Equity Investment Scheme (SMIEIS) have been promoting the SMEs in diverse ways as SMEs hold the key to the revival of the manufacturing sectors in Nigeria.
Consequently, government has done enough to promote the development of SMEs through reduction of loan interest and ensuring that the financial service sector is stable and viable to support SMEs growth which will in turn contribute to the capacity building and economic empowerment in the country.
Conclusion
Owing to the above findings, the researcher thereby concludes that business development services are particularly important as the market place become more complex and developing marketing strategies that would help Small and Medium Enterprises (SMEs) to compete more effectively because of the need to generate income, repay loans and fulfill wider family and community responsibility which formed part of the benefits of owning a business.
Moreover, constant access to finance is the key to the survival and development of strong SMEs sector because flexible finance meets the developmental needs of the enterprise.
The Economic Reforms in Nigeria need to be sustained by ensuring the soundness and credibility of the financial service industry which would help the development of SMEs in Nigeria.
Government should ensure the implementation of existing legal framework for SMEs, adopting the establishment and survival of SMEs that will contribute to capacity building, utilization of local raw material etc.
Small and Medium Scale Enterprises (SMEs) are universally acknowledged as effective instrument for poverty reduction, employment generation, wealth creation, economic growth and overall development that have become the bedrock for rapid economic growth and development. Social infrastructures such as electricity, water, roads, rail, communication etc and other support services in technology, skills and marketing are crucial for SMEs economic performance and competitiveness as well as the provision of technology related support system which contribute effectively to the technological capabilities of SMEs.
Encouraging SMEs to change their technology and organization according to their perception of best practice to run the business profitably in order to ensure their sustainability and foster innovations and production capabilities as well as facilitating the transfer and use of appropriate technology.
In order to provide realistic policy recommendations for helping SMEs to compete in regional and global markets, there is need for proper understanding of the internal processes and external factor leading to the building of technological and marketing capabilities in enterprises.
Recommendations
The primary goal of government initiatives/schemes such as NEEDS, SEEDS, BOI, SMIEIS, etc is to build a private sector through SMEs that can take advantage of the opportunities that abound in the domestic, regional and global markets and contribute to the development of the Nigerian economy. The role of government therefore should be a facilitator and promoter in the economy by providing targeted incentives and creating enabling environment for business through reduction in policy-related costs and risks and invest heavily in infrastructures such as electricity, transport systems, water supply, communication etc.
There is need to establish or introduce entrepreneurship development programme (EDP) in tertiary institutions and other skills acquisition centers which will serve as pilot project to train school leavers and graduates that are unemployed so as to equip them with the knowledge and skills required in running a SME.
NEEDS, BOI and SMIEIS among others seek rapid growth of a resilient and competitive private sectors as a key component of a sustainable reform programme and to achieve this, it requires proper implementation and financing. Government at all levels (federal, state and local) should commit to systematically mobilize national resources to facilitate the development of strategic economic infrastructure that improves the attractiveness of Nigeria as a prepared investment destination in order to foster sustainable development of the Nigeria economy, there is need to develop strategies that focus on small and medium scale decentralize renewable energy systems utilizing locally available energy resource couple with greater access to information, technical training, credit and market facilities which have the potential to succeed in promoting sustainable economic development in Nigeria.
Suggestions for Further Students
Our suggestions for further students are that they should come together to do their research work, bring ideas individually about the problems being carried out and not to leave the research for a person only in the name of the person to be their leader.
REFERENCES
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